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Bexley ‘most affordable’ for London’s first-time buyers

Gleren Meneghin (Unsplash)
Gleren Meneghin (Unsplash)

The London borough of Bexley is the most affordable place in the capital for buyers taking their first steps onto the property ladder, new research has found.

Digital broker Mojo Mortgages found that, taking into account average property prices and annual incomes, Bexley offers the lowest monthly mortgage payments relative to monthly income at 29%.

This was followed by Barking & Dagenham at 30%, with a tie for third place between the boroughs of Newham and Croydon, where monthly repayments represent 31% of monthly incomes.

At the other end of the scale, the First Homes Scheme Affordability Index found the borough of Camden to be the least affordable area for first-time buyers, with monthly repayments representing 64% of average incomes. Next came Hammersmith and Fulham (56%), then Westminster (54%).

First Homes scheme

The findings coincide with the forthcoming launch of the government’s First Homes scheme. This is an initiative designed to help key workers and first-time buyers in England onto the property ladder in their local areas.

The scheme starts at the end of June and will offer discounts of at least 30% on properties with a market value of up to £420,000 (or £250,000 outside of Greater London) once the discount is applied.

To be eligible for the help, combined household income must be no greater than £90,000 (or £80,000 outside Greater London). A condition of the initiative means that when a property is re-sold, the discount stays with that property.

First Homes has been criticised by the housing charity Shelter which claims that, even with the discounts applied, 96% of those on average incomes would not be able to afford a new property built under the scheme.

But according to the digital broker behind the research, the scheme could save buyers in London an average of £766 per month on mortgage repayments.

Cassie Stephenson of Mojo Mortgages said: “The savings available - particularly allowing first-time buyers access to higher LTV mortgages through reduced deposits - could also mean better access to lower interest rates and improved overall savings across the lifetime of a mortgage”.

“Buying a home is also a significant long-term investment towards your financial future as opposed to lining a landlord’s pocket,” Stephenson added.

• London’s rental market is experiencing a strong recovery despite the pandemic, writes Andrew Michael.

Latest analysis of the lettings market from estate agents, Chestertons, revealed that new tenant registrations were up by 17% across its 31 London branches from April to May this year. Agreed lettings rose by 10% over the same period.

Although demand was up, the number of properties available to rent at the end of May was down 3% compared with a month earlier.

With demand outstripping supply, Chestertons said fewer landlords are now willing to drop their rents, a stark contrast to this time last year.

• Separately, the rental sector is being criticised for poor tenant referencing practices that are obliging those without credit reports to pay up to a year’s rent upfront.

Alexander Siedes of tenant due diligence and guarantee firm Homeppl says the problem affects a range of individuals, including international tenants, the self-employed and students: “Tenant referencing is generally carried out by insurance companies, and in some cases they automatically deny ‘invisible’ consumers - those without credit reports - forcing them to provide between 50% and 100% of the rent upfront.

“This means they have to stump-up around £25,000 on average, and if they can’t afford that they must find a UK based guarantor - typically a UK homeowner earning over £84,000 per year.”

Siedes says the referencing process should validate the person’s identity, employment status and capacity to meet their legal and financial obligations to assess their true suitability for a tenancy.